Less Volatility Than Earlier in the Week

March 27, 2015

The dollar rose overnight by 0.5% versus the euro, 0.4% against the Australian and New Zealand dollars, 0.3% relative to the Swiss franc, 0.2% vis-a-vis the loonie and 0.1% against the yuan and yen but slipped 0.2 against sterling.

Concern has subsided about the impact on oil prices from the air strike on Yemen.  West Texas Intermediate oil settled back 1.8% to $50.51 per barrel.

Japan’s Nikkei closed down 1.0%.  Share prices elsewhere in the Pacific Rim were mixed with losses of 1.2% in Taiwan and 0.1% in South Korea but advances of 0.7% in Australia, 0.6% in China, 0.5% in Singapore and Indonesia, and 0.4% in New Zealand.  The markets in Hong Kong and India showed no net change.

Gold recovered 0.6% and is just under $1,200 at $1,197.10 per troy ounce.

The ten-year British gilt yield jumped five basis points, helped by Bank of England Governor Carney’s reassertion that the next British interest rate change will be upward.  The ten-year Japanese JGB climbed five basis points to 0.37%, while the 10-year German bund remained at a lowly 0.21%.

Japanese CPI data belied the Bank of Japan’s confidence in attaining 2% core inflation within a year.  The core rate excluding the consumption tax impact and fresh food prices fell to zero in February from 0.2% in January and 1.0% as recently as September.  Overall CPI inflation slowed to 2.2% after three consecutive readings of 2.2%.  CPI inflation excluding both energy, fresh food and the consumption tax was also at zero.  Tokyo consumer prices in March rose 0.2% on month seasonally adjusted and 2.3% on year.

Japan’s jobless rate as expected edged back to 3.5% in February, splitting the difference between December’s 3.4% and January’s 3.6%.  Employment posted on-year growth of 0.6%, down from 0.8%, and the job offers:seekers ratio edged up 0.01 to 1.15.

Japanese retail sales fell 1.8% on year in February, which was more than forecast and near to January’s 2.0% drop.  After month-on-month declines of 0.2% in November, 0.4% in December and 1.9% in January, a rise of 0.7% last month was not as much as expected.  But large-store retail sales went up 1.3% between February 2014 and February 2015.

Japanese real household spending slumped 2.9% on year in February but went up 0.8% on month after a 0.3% dip the month before.  Real disposable income was 0.5% lower than a year before.

Chinese corporate profits in the first two months of 2015 were a disappointing 4.2% weaker than a year before.  Such had fallen by 4.8% between 4Q13 and 4Q14.  This news particularly weighed on the currencies of Australia and New Zealand.

The Nationwide index of British home prices recorded a smaller 5.1% on-year pace of rise in March, down from 5.7% in February, 6.8% in January and 11.0% last August.  Indeed, 5.1% was the slowest 12-month advance since September 2013.

German import price deflation moved in to 3.0% in February from 4.4% in January, reflecting a 9.2% on-month jump in energy.  Energy still managed to decline 28.4% on year, while all other import prices posted a collective increase of 1.8%.  Export prices firmed 0.3% on month and 0.7% on year.

French consumer confidence rose a point to a reading of 93 in March, best since November 2010.

The 12-month change in Italian retail sales swung from -2.3% in November to a tiny 0.1% uptick in December and a more respectable 1.7% rise in January.  Italian industrial orders, which had risen 4.5% in December, fell back 3.6% in January and were 5.5% lower than a year before.  Industrial sales slid 1.6% on month and dropped 2.5% on year.

Swedish retail sales edged up 0.2% in February and were 4.8% greater than a year earlier.  Sales in December-February averaged 1.0% more than in the previous three-month period.

Finnish consumer confidence increased by 0.6 points to 11.2, the strongest reading since May 2012 and the sixth month-on-month improvement in a row.  Business sentiment edged up a point to a score of minus 7.

Norwegian retail sales in February exceeded the year-earlier level by 1.7%.  Norwegian unemployment of 3.0% in March matched expectations.

Icelandic CPI inflation doubled to 1.6% in March.

Stanley Fisher, Vice Chairman of the Federal Reserve, spoke on banking regulation in Frankfurt but didn’t touch on monetary policy in his comments.  He urged greater supervision over shadow banks.

Markets now await the final revised estimate of fourth-quarter U.S. GDP.  A month ago, such got revised to 2.2% from 2.6% reported initially.  Another U.S. data point to be released today is the U. Michigan/Reuters consumer sentiment index.  The Conference Board’s index of eurozone leading economic indicators arrives, and so do Mexican trade figures.  Fed Chair Yellen speaks this afternoon.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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